FULL TEXT: Govt Releases Details On The COVID-19 Economic Recovery And Stimulus Package

Introduction

1. On 1 May 2020, The President of the Republic of Zimbabwe, His Excellency, E.D. Mnangagwa unveiled a ZWL$18 billion Economic Recovery and Stimulus Package aimed at reinvigorating the economy and providing relief to individuals, families, small businesses and industries impacted by the economic slowdown caused by the Coronavirus pandemic and the attendant response measures implemented by the government to control the health crisis. We now provide more details of the package below.

2. The main elements of the recovery proposals are in the main to; –

a. Provide critical liquidity support to ALL the productive sectors of the economy; including Manufacturing, Agriculture, Mining and Tourism;
b. Protect employment through prevention and minimisation of Covid-19 induced and other related lay-offs;
C. Provide income support for ALL vulnerable groups and individuals;
d. Provide a recovery mechanism for the most affected micro-enterprises and households;
e. Take advantage of the Covid-19 response tools to further strengthen and expand existing social safety nets;
f. Use existing infrastructure to deliver interventions ie Banks and MFIS, MNOs and identified Civic Society structures in order to reach the intended beneficiaries quickly and in a systematic way; and to
g. Upscale investments in social and economic infrastructure, including the recovery of assets that were recently destroyed by floods in order to build the resilience of affected communities.

Summary of the Covid-19 Economic Recovery and Stimulus Package

  • Agriculture Sector Support – ZWL$6.08 billion
  • Working Capital Fund – ZWL$3.02 billion
  • Mining Sector Fund – ZWL $1.00 billion
  • SME Support Fund – ZWL $0.50 billion
  • Tourism Support Fund – ZWL $0.50billion
  • Arts Sector Fund – ZWL $0.020 billion
  • Liquidity Release from Statutory Reserves – ZWL$2.00billion
  • Health Sector Support Fund ZWL – $1.00 billion
  • Broad Relief Measures – ZWL $1.50 billion
  • Food Grant – ZWL $2.40 billion
  • Total ZWL – $18.02 billion
  • % of GDP – 9%

Agriculture Sector Support- ZWL$6.1billion

Support for the Winter Wheat Cropping Programme ZWL$3.2 billion

3. Agriculture is a key sector in the economy and Government is committed to ensuring food
and nutrition security. The Covid-19 pandemic requires that grain imports be minimised
where possible.

4. To this end ZWL$3.2 billion will be set aside to fund a comprehensive Winter Wheat
Programme.

Support for the 2020/21 Cropping Programme-ZWL$2.880billion

5. Financing for the 2020/21 Summer Cropping Programme will continue to be reviewed as the full impact of the Covid-19 becomes known. However, it is anticipated that a significant upward revision of the resources for the Vulnerable Farmers Input Support Programme is now necessary and an amount of $2.880 billion will be made available to small scale and communal farmers.

Working Capital Fund for Industry Sectors-ZWL$3.02 billion

6. Provision of Government Guarantees of up-to ZWL$2.5 billion for bank loans accessed by industry for working capital purposes.
7. Equity injection of ZWL$500 million to capacitate Silo Food Industries to enable the entity to scale up its operations.
8. Targeted investment of ZWL$20 million into the leather and textiles value chain.

Support for the Mining Sector-ZWL$1 billion
9. Introduction of credit facility for the Gold sector to the tune of ZWL$1 billion targeting both small scale and large scale miners. Part of this funding will be available in foreign currency
10. Ring fence, guaranteed fuel and power for the mining sector to ensure that production is not disrupted.
11. Resuscitate closed gold mines by designating them Special Economic Zones.
12. Reduce application fees and annual rentals to encourage investments in exploration activities
13. Speed up the implementation of computerised Cadastre System to create confidence in the management of mining title and strengthen the security of tenure so as to promote investment in the mining sector.

SME Support Fund -ZWL$500 million

14. An amount of ZWL$500 million has been earmarked for the MSMEs sector to assist SMEs to quickly resuscitate their businesses and recover from the effects of COVID-19. Government will provide these resources through additional capitalisation to SMEDCO, the Women’s Bank and Empower Bank to enable them to support small businesses to access working capital.

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